China Is Said to Curb Power Supply for Some Bitcoin Miners

(Bloomberg) -- China plans to limit power use by some bitcoin miners, people familiar with the matter said.

The People’s Bank of China outlined the plan Wednesday at a closed-door meeting, according to the people, who asked not to be identified because it wasn’t public. They didn’t detail how authorities plan to enact the curbs.

Officials are concerned that bitcoin miners are taking advantage of low power prices in some areas and affecting normal electricity use in some cases, the people said. Local officials have been asked to investigate the high consumption associated with the industry, they said.

The curbs will also involve other regulators such as the National Development and Reform Commission, which oversees the power supply. The PBOC didn’t immediately respond to a fax requesting comment after the close of regular business hours.

"This may have contributed to bitcoin coming off its daily highs and electricity usage certainly appears to be a significant challenge for the cryptocurrency in the years ahead," said Craig Erlam, senior market analyst at online trading firm Oanda in London. "Bitcoin is trading relatively flat on the day. The size of the moves we’ve seen are small in comparison to what we’ve become accustomed to in recent months."

China is home to many of the world’s largest bitcoin miners, who use massive computing power to verify transactions in the cryptocurrency. The global industry’s energy-intensive practices use as much electricity as 3.4 million U.S. homes, according to the Digiconomist Bitcoin Energy Consumption Index.

Beijing’s scrutiny of miners follows a sweeping cryptocurrency crackdown last year. Authorities outlawed initial coin offerings in September and have called on local exchanges to halt virtual currency trading.

Bitcoin, which surged 15-fold last year, was little changed on Wednesday.

(Updates to add analyst comment in fifth paragraph.)

--With assistance from Todd White and Ken Wills

To contact Bloomberg News staff for this story: Steven Yang in Beijing at kyang74@bloomberg.net.

To contact the editors responsible for this story: John Liu at jliu42@bloomberg.net, Jeff Kearns, Michael Patterson